LinkedIn's IPO: Eight Notable Points

Jan.28.11 | About: LinkedIn (LNKD)

LinkedIn (NYSE:LNKD) on Thursday filed for an initial public offering and detailed profits for the nine months ended Sept. 30, a relatively new employee base and risk factors that included competition from the likes of Google (NASDAQ:GOOG) and Facebook.

The professional networking site said it planned to raise a maximum of $175 million in its IPO. Morgan Stanley, BofA Merrill Lynch and J.P. Morgan are on tap to be the lead underwriters. The tech IPO window has opened and companies ranging from Demand Media (DMMD) to Skype are either going public or planning to.

Here’s a look at a few notable points from LinkedIn’s prospectus:

The financials: For the nine months ended Sept. 30, LinkedIn reported a profit of $1.85 million on revenue $161.4 million. The company lost $3.97 million and $4.52 million in 2009 and 2008, respectively. LinkedIn primarily makes money by selling recruiting services and premium accounts.

The metrics: LinkedIn reported 90 million registered users as of Dec. 31 with 65 million unique visitors and 5.5 billion page views in a quarter. More than half of LinkedIn’s members are from outside the U.S.

The customer base: LinkedIn counted 69 of the Fortune 100 as customers of its hiring solutions. In total, 3,900 companies used LinkedIn’s hiring services. LinkedIn counted 3.9 million corporate solutions customers as of Dec. 31.

What LinkedIn will do with the dough: The company said in its filing that it will expand internationally, build its infrastructure and hire more people.

Registrations and traffic disconnects:
LinkedIn said -

The number of registered members in our network is higher than the number of actual members because some members have multiple registrations, other members have died or become incapacitated, and others may have registered under fictitious names. Given the challenges inherent in identifying these accounts, we do not have a reliable system to accurately identify the number of actual members, and thus we rely on the number of registered members as our measure of the size of our network. Further, a substantial majority of our members do not visit our website on a monthly basis, and a substantial majority of our page views are generated by a minority of our members.

The IT picture: LinkedIn said it recently implemented a disaster recovery program so it can use a back-up data center if needed. The program is functional, but doesn’t yet provide a real-time backup data center.

What are the threats to LinkedIn? The company cited Facebook, Google, Microsoft (NASDAQ:MSFT), Twitter and (NYSE:CRM) via Jigsaw as companies that could develop professional networks. Facebook would be the most obvious threat.

The employee base: 57 percent of LinkedIn’s employees have worked at the company less than a year. LinkedIn has 990 employees.